Koninklijke Ahold Delhaize N.v. · EURONEXT:AD
Koninklijke Ahold Delhaize — Investor Day (December 2016)
155 slides from Koninklijke Ahold Delhaize's investor day presentation, Dec 7, 2016
Slide 1: Capital Markets Day
Capital Markets Day December 7, 2016
Slide 2: Agenda
2 Agenda 09:00 Opening Henk Jan ten Brinke 09:05 Strategy Update Dick Boer Digital & eCommerce Hanneke Faber 10:30 Break 11:00 Integration & Synergies Frans Muller 11:30 Financial Framework Jeff Carr 12:00 Q&A/Wrap-up All/Dick Boer 13:00 Lunch
Slide 3: Strategy Update – Dick Boer
Strategy Update Dick Boer President and CEO December 7, 2016
Slide 4: Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
4 Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
Slide 5: Highlights: Better Together
5 Highlights Better Together • Better Together strategy • Operating model – Captures benefits of international scale to build – Committed to grow leading supermarket brands great local brands while remaining rigorously focused on cost discipline – Confirms merger rationale – New target to double net
Slide 6: Better Together Strategy
We integrated key trends and key strengths to build our Better 6 Together strategy Key Trends Key Strengths More value Solid foundation More convenience Better Together Great local brands • Best-in-class in Supermarkets More fresh & healthy Strategy • Superior omnichannel & digital offering More per
Slide 7: Key trends affecting food retailing
7 Let’s focus on the key trends affecting food retailing Key Trends Key Strengths More value Solid foundation More convenience Better Together Great local brands • Best-in-class in Supermarkets More fresh & healthy Strategy • Superior omnichannel & digital offering More personal Leadership Our commi
Slide 8: Shoppers continuously seeking value
Shoppers continuously seeking value 8 Key Trends Customers are buying more value and more premium products Tech driving (price) transparency The hybrid The hybrid The hybrid consumer consumer is consumer seeks low less attracted seeks greater costs for to mid- personal Value basic market offers valu
Slide 9: Customers looking for convenience across channels
Customers looking for convenience across channels 9 Key Trends Growth of ready-to-eat and fresh convenience Increased ease of shopping More value More convenience More fresh & healthy More personal
Slide 10: Increased focus on health & product origin
Increased focus on health & product origin 10 Key Trends “You are what you eat” Fresher food through local sourcing & vertical integration More value More convenience More fresh & healthy More personal
Slide 11: Seeking personal relevance and connection
Seeking personal relevance and connection 11 Key Trends Digital solutions enable personalization of offers Stronger local connection and better service More value More convenience More fresh & healthy More personal
Slide 12: Key strengths to address these trends
12 We have key strengths to address these trends Key Trends Key Strengths More value Solid foundation More convenience Better Together Great local brands • Best-in-class in Supermarkets More fresh & healthy Strategy • Superior omnichannel & digital offering More personal Leadership Our commitment to
Slide 13: Ahold Delhaize is well positioned to continue winning
13 Ahold Delhaize is well positioned to continue winning Key Strengths • Great local brands with presence on both sides of the Atlantic • Best-in-class Supermarket player • Superior Omnichannel and Digital offering • Operating cash flow among the leaders in the industry • Deep experience Fresh and O
Slide 14: Great local brands on both sides of the Atlantic
Great local brands on both sides of the Atlantic 14 US Key Strengths #1 or #2 in 24 DMAs* representing c. 80% of our US Sales Food Lion Stop & Shop Hannaford Peapod Giant Carlisle Giant Landover Martin’s Food Market bfresh Europe Super Indo • #1 in the Netherlands Albert Heijn Etos Gall & Gall Bol.c
Slide 15: Strong and experienced leadership team
Strong and experienced leadership team 15 Dick Boer President and Chief Executive Officer Key Strengths Frans Muller Jeff Carr Deputy Chief Executive Officer and Chief Financial Officer Chief Integration Officer Acting COO, a.i., Delhaize America Kevin Holt Pierre Bouchut Chief Operating Officer, Ch
Slide 16: Building our Better Together Strategy
16 Building our Better Together Strategy Key Trends Key Strengths More value Solid foundation More convenience Great local brands • Best-in-class in Supermarkets • Superior omnichannel & More fresh & healthy digital offering More personal Leadership Our commitment to succeed Proven track record in e
Slide 17: Better Together - Strategic Framework
17 Better Together - Ahold Delhaize Strategic Framework Our purpose Together, we build Great Local Brands, bringing Fresh Inspiration Every Day Our sustainable business model Our promises Save for our customers: Invest in our customer A better • Buy better proposition: place to • Operate smarter • A
Slide 18: Our purpose
Together Great local brands Our purpose Together, we build Great Local Brands, bringing Fresh Inspiration Every Day. Fresh inspiration Every Day
Slide 19: Better Together - Strategic Framework
19 Better Together - Ahold Delhaize Strategic Framework Our purpose Together, we build Great Local Brands, bringing Fresh Inspiration Every Day Our sustainable business model Our promises Save for our customers: Invest in our customer A better • Buy better proposition: place to • Operate smarter • A
Slide 20: Our sustainable business model powers our strategy
20 Our sustainable business model powers our strategy Our Sustainable Save for our customers Business Model Invest in our customer proposition Fund growth in key channels Save for our customers Buy better Operate smarter Waste less
Slide 21: Saving for our customers begins with buying better
21 Saving for our customers begins with buying better Examples Our Sustainable Business Buy better Model Delhaize Belgium Operate smarter Transformation Plan Save for our customers Waste less Buy better Operate smarter Waste less
Slide 22: Our brands are operating smarter everyday
Our brands are operating smarter everyday 22 Examples Our Sustainable Business Buy better Model Delhaize Belgium Operate smarter Transformation Plan Save for our customers Waste less Buy better Operate smarter Waste less
Slide 23: Delhaize Belgium realized it needed to improve its cost position
23 Delhaize Belgium realized it needed to improve its cost position Our Cost per productive hour 2014 Sustainable (2014, Delhaize* = 100) Business • Cost handicap in wage Model and labour conditions Delhaize* 100 • Competition leveraging scale and cost benefits Colruyt 84 • High operational costs in
Slide 24: Transformation Plan on track for €80M savings
It developed and executed its Transformation Plan; 24 it is on track for €80M in savings Our 2014 Current status Sustainable Business • Cost handicap in wage • Leaner workforce Completed (2,083 vs 1,800 initially) Model and labour conditions • Adapted wage Completed • Competition leveraging measures
Slide 25: Executing the new commercial strategy is the next step
Executing the new commercial strategy is the 25 next step Our 2014 Current status Commercial Strategy Sustainable Business • Cost handicap in wage • Leaner workforce Model and labour conditions • Adapted wage Revamped • Competition leveraging measures and benefits commercial plan scale and cost bene
Slide 26: Wasting less is key to save for our customers
26 Wasting less is key to save for our customers Examples Our Sustainable Business Buy better Model Delhaize Belgium Operate smarter Transformation Plan Save for our customers Waste less Buy better Operate smarter Waste less
Slide 27: Our sustainable business model powers our strategy
27 Our sustainable business model powers our strategy Our Sustainable Save for our customers Business Model Invest in our customer proposition Invest in our customer Fund growth in key channels proposition Affordable for all Best own brands Fresher & healthier Most local & personal
Slide 28: Four areas to differentiate our customer proposition
Our brands are focused on four areas to differentiate our 28 customer proposition Our Examples Sustainable Business Model Affordable for all Best own brands Invest in our Fresher & healthier customer proposition Affordable for all Best own brands Most local & personal Fresher & healthier service Mos
Slide 29: Affordable for all – Zooming in on Food Lion
29 Affordable for all – Zooming in on Food Lion Our Sustainable Business Model • Conveniently located • Easy to shop stores, part stores of the neighborhood • Low prices driven by • Great everyday prices strong promotions and good weekly deals • Inconsistent fresh • Consistently fresh execution and
Slide 30: Affordable for all is a key pillar in Food Lion's strategy
30 Affordable for all is a key pillar in Food Lion’s strategy Our Sustainable Protecting and strengthening a strong price heritage is the most critical Business Model component of delivering Food Lion's strategy of Easy, Fresh & Affordable. You can count on Food Lion Every day! • Affordability is on
Slide 31: Food Lion testing, refining and implementing since 2013
31 Food Lion has been testing, refining and implementing since 2013 Our Easy, Fresh & Concept store Greenville DMA Charlotte DMA Sustainable Affordable strategy launches in second test market launches developed Concord NC launches (47 stores) (142 stores) Business Model 2013 2014 2015 2016 2017 Thre
Slide 32: Easy, Fresh and Affordable is winning with customers
32 Easy, Fresh and Affordable is winning with customers Our Sustainable Average Weekly Sales/Store Business Model Wilmington (29 stores) Greenville (47 stores) Raleigh (162 stores) Launch: Q3 2014 Launch: Q4 2014 Launch: Q4 2015 +10% +3% +8% Invest in our customer proposition 2014 2015 2016* 2014 20
Slide 33: Continued positive momentum
33 And continues to support the overall positive momentum Our • Encouraging results Sustainable Business • Wilmington and Raleigh - Strong sales growth Model • Greenville - Successfully defend against significant competitive openings • Charlotte - early confident results consistent with previous mar
Slide 34: Best own brands is the second focus area
Best own brands is the second focus area 34 Our Examples Sustainable Business Model Affordable for all Best own brands Invest in our Fresher & healthier customer proposition Affordable for all Best own brands Most local & personal Fresher & healthier service Most local & personal
Slide 35: Local own brands known for quality and value
35 Our local ‘own brands’ are known for their quality and value Our Award winning own brands Great potential to leverage Sustainable promoting innovation and healthy eating best practices across our brands (e.g. AH) Business Continuous improvement of own brands Europe: Model • ~50% own brand penetra
Slide 36: Fresher & healthier is the third focus area
Fresher & healthier is the third focus area 36 Our Examples Sustainable Business Model Affordable for all Best own brands Invest in our Fresher & healthier customer proposition Affordable for all Best own brands Most local & personal Fresher & healthier service Most local & personal
Slide 37: Alfa Beta is known across Greece for its fresh offering
37 Alfa Beta is known across Greece for its fresh offering Our Sustainable • 26.4% fresh market share in Greece Business • ~9 out of 10 customer satisfaction rating for fresh Model “Every day, Alfa Beta offers the best Fresh Products, from every corner of Greece” Invest in our customer proposition A
Slide 38: Fresher & healthier - Zooming in on Healthier
Fresher & healthier - Zooming in on Healthier 38 Our Sustainable Equilibrium Healthier Super Lunch Business Corner assortment for kids Model Health & Wellness concept with Reducing the level of salt and A range of nutritionally good coverage of food & non sugar in assortment balanced, tasty packaged
Slide 39: Most local and personal service is the fourth focus area
Providing the most local and personal service is our fourth 39 area of focus Our Examples Sustainable Business Model Affordable for all Best own brands Invest in our Fresher & healthier customer proposition Affordable for all Best own brands Most local & personal Fresher & healthier service Most loc
Slide 40: Most local & personal service
Most local & personal service 40 Our Most Local... Sustainable Business Model ...and Personal service to drive new growth Invest in our customer Saving money proposition Affordable for all Saving time Best own brands Fresher & healthier Eating healthier Most local & personal
Slide 41: Our sustainable business model powers our strategy
41 Our sustainable business model powers our strategy Our Sustainable Save for our customers Business Model Invest in our customer proposition Fund growth in key channels Fund growth in key channels Supermarkets eCommerce Smaller formats
Slide 42: Expanding in three channels
42 Ahold Delhaize is focused on expanding in three channels Our Sustainable Business Model Supermarkets eCommerce Fund growth in key channels Supermarkets Smaller formats eCommerce Smaller formats
Slide 43: Supermarket is the key channel in our main markets
43 Supermarket is the key channel in our main markets Our US - Delhaize America markets US - Ahold USA markets * Sustainable 15% Business 19% Supermarkets Supermarkets Model Discount * Discount * 25% Drug Drug 57% 24% 60% Source: Nielsen AC View, DA Sales – 2015 DA; DMAs Source: Nielsen AC View, AUS
Slide 44: Ahold USA is heading Northeast
Ahold USA is heading Northeast 44 Our Ahold USA ambition Heading Northeast strategy Sustainable Business Model Ambition • Differentiating Customer Value Proposition to deliver AUSA Service and Quality perception • Better Value • Improved Service • Improved Quality Q3 2016 Ahold Q3 2014 • Brands are
Slide 45: Ahold USA has strong momentum
Ahold USA has strong momentum 45 Our Sustainable Heading East Business – Affordable for All Model • Successive waves of price investments – five launched • Significant marketing and communications support Heading North – Fresher & Healthier • Major focus on Fresh • Service and Quality improvement He
Slide 46: Ahold USA improved price positioning and perception
Ahold USA has improved both price positioning and price 46 perception Our Sustainable Improved EDL price positioning across Initial signs of improved customer price Business all our brands perception across all our brands Model Q3 2016 Price index and change vs. Q1 2014 Price Perception Q1 2014 – Q3
Slide 47: Investing in being fresher and healthier
47 While also investing in being fresher and healthier Our New Produce Departments New Bakery Departments Sustainable Delivering ~4% ID sales growth and Delivering ~5% ID sales growth Business improved quality perception Model Nature’s Promise Deli Grab & Go Growing double digits vs LY Starting depl
Slide 48: Ahold USA seeing encouraging signs of progress
48 Ahold USA is seeing encouraging signs of progress Our While we have seen signs of improved sales trend - the focus is to continue to enhance our Sustainable execution and accelerate top line growth Business AUSA Food Market Volume Share Change Model 0.9 share points 0.9% 0.7% (0.1)% AUSA AOC Mark
Slide 49: Ahold USA will continue progress and accelerate sales growth
49 Ahold USA will continue its progress and accelerate sales growth Our • Good progress in our market share, price Sustainable positioning and brand perception Business • Real commitment to accelerate our sales Model growth • In 2017, we will continue to focus our efforts to better enable our local
Slide 50: Stop & Shop Supermarkets in Greater New York
Stop & Shop Supermarkets in Greater New York 50 Our • Rebranded to Stop & Shop in Acquired 25 high-quality Sustainable stores from A&P in white accelerated 1 week conversions Business space locations • Strong store execution from day 1 Model July 2015 November 2015 2016 • #2 within New York DMA, clo
Slide 51: Supermarkets – Zooming in on Hannaford
Supermarkets – Zooming in on Hannaford 51 Our Quality perception Hannaford Key Sustainable • 188 stores scores (Q2 16) competitors (5) Business • Very high Net Promoter Score (65) Model Produce 56 22-50 • Loyal customer base • Fresh, service oriented Meat 52 15-50 • Priced right Seafood 53 12-52 • L
Slide 52: Supermarkets – Zooming in on CSE
Supermarkets – Zooming in on CSE* 52 Our Sustainable #2 in Czech Republic #1 in Greater Bucharest Business Model Accelerated growth through Strong growth in supermarkets differentiated remodeling… 293 Supermarkets remodels YTD +3% sales 128 246 168 …combined with store-led interventions to maximize
Slide 53: Fund growth in key channels
Fund growth in key channels 53 Our Examples Sustainable Business Model Supermarkets eCommerce Fund growth in key channels Supermarkets Smaller formats eCommerce Smaller formats
Slide 54: Smaller formats present a great opportunity
54 Smaller formats present a great opportunity in all our markets Our Examples Sustainable Business Model Supermarkets eCommerce Fund growth in key channels Supermarkets Smaller formats eCommerce Smaller formats
Slide 55: Strong expertise in smaller formats
55 Most of our brands have strong expertise in smaller formats Our #1 or #2 in smaller formats across Europe Sustainable Business Model AH To Go - 100 M2 Etos – 214 M2 Gall & Gall – 90 M2 Proxy Delhaize - 560 M2 Delhaize Shop & Go - 150 M2 AB Shop & Go - 100 M2 AB Food Market - 390 M2 AB City - 450
Slide 56: Better Together - Strategic Framework
56 Better Together - Ahold Delhaize Strategic Framework Our purpose Together, we build Great Local Brands, bringing Fresh Inspiration Every Day Our sustainable business model Our promises Save for our customers: Invest in our customer A better • Buy better proposition: place to • Operate smarter • A
Slide 57: Every day, a better place to shop
Every day, a better place to shop 57 Our promises A better place to shop Every Day A better A better place to neighbor work Equilibrium Own Brand line of Our Albert Heijn (health & wellness corner) fresh meal kits Examples `````` Better place to shop Better place to work Associate summer Sustainable
Slide 58: Better place to shop – Albert Heijn
Better place to shop – Albert Heijn 58 Our promises Every AH store is right for its specific location Innovation & improvement in our assortment and in connection with its neighbourhood across all categories Everbody Appie movement: locally connected Strong comparable sales growth Netherlands and pe
Slide 59: Every day, a better place to work
Every day, a better place to work 59 Our promises A better place to shop Every `````` Day A better A better place to neighbor work Equilibrium Own Brand line of Our Albert Heijn (health & wellness corner) fresh meal kits Examples `````` Better place to shop Better place to work Associate summer Sust
Slide 60: Associates key to delivering great local brands
Associates key to delivering great local brands 60 Our promises 375,000 Associates Over 83% participation top 10 rates in Global International Engagement Surveys food retailer Balanced gender Inclusive and representation healthy workplace male / female 5 Values Courage Integrity Teamwork Better plac
Slide 61: Every day, a better neighbor
Every day, a better neighbor 61 Our promises A better place to shop Every `````` Day A better A better place to neighbor work Equilibrium Own Brand line of Our Albert Heijn (health & wellness corner) fresh meal kits Examples `````` Better place to shop Better place to work Associate summer Sustainab
Slide 62: Sustainable Retailing is embedded in our Strategy
62 Sustainable Retailing is embedded in our Strategy Our promises A better A better A better Ahold Delhaize ranks place to place to neighbor shop work among leaders in Dow Jones Sustainability World Promote Create Index Reduce healthier healthy and inclusive food waste eating workplace • Ahold Delha
Slide 63: Building our Better Together strategy
63 Building our Better Together strategy Key Trends Key Strengths More value Solid foundation More convenience Better Together Great local brands • Best-in-class in Supermarkets More fresh & healthy Strategy • Superior omnichannel & digital offering More personal Leadership Our commitment to succeed
Slide 64: Clear measures to track strategy execution
64 Clear measures to track strategy execution Tracking the strategy execution using specific KPIs (e.g., market share, Net Promoter Score) and management incentives using a well-defined plan Short-term Incentive Plans Long-term Incentive Plans Financial Non-financial Financial Non-financial Sustaina
Slide 65: Ahold Delhaize… Better Together
65 Ahold Delhaize… Better Together … a solid foundation ... and a strong Better Together Strategy • Great local brands • Built from powerful combined strengths • Both sides of the Atlantic • From companies with • Best-in-class Supermarkets • Complementary cultures • Similar values • Superior Omni-ch
Slide 66: Cautionary notice
66 Cautionary notice This communication includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words such as strategic, sustainable, buy better, operate smarter, waste less, growth, invest, customer proposition, promises, foll
Slide 67: Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
67 Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
Slide 68: Digital Personalization and eCommerce
Capital Markets Day Digital Personalization and eCommerce Hanneke Faber Chief eCommerce and Innovation Officer December 7, 2016
Slide 69: Ahold Delhaize Strategic Framework
69 Ahold Delhaize Strategic Framework Our purpose Together, we build Great Local Brands, bringing Fresh Inspiration Every Day Our sustainable business model Our promises Save for our customers: Invest in our customer A better • Buy better proposition: place to • Operate smarter • Affordable for all
Slide 70: Most local & personal service
Most local & personal service 70 Our Sustainable Business Model Invest in our customer proposition Affordable for all Best own brands Fresher & healthier Most local & personal
Slide 71: Bol.com generates about 20% of sales from personalization
71 Bol.com generates about 20% of sales Our from personalization Sustainable Bol.com builds a unique experience for …which it uses to make …and to keep Business each customer, based on… recommendations in real time … innovating Model • Browse, buy & • World class data Promotions based on Suggest rel
Slide 72: Sharing bol.com personalization capabilities across supermarket brands
72 We are sharing bol.com personalization Our capabilities across supermarket brands Sustainable Business Model Data Collected in Combined Persona- Offers are Customers Customers data and fed lized offers loaded to receive redeem, • Trans- manage- through a & messages POS offers, buy and actional me
Slide 73: Personalized benefits for every customer
…to offer personalized benefits for every customer 73 Recent examples: Our Saving time: Eating healthier: Saving money: Sustainable Personal promo & pricing Advanced list building Personal health dashboards Business Model Sugar in shopping list per month Invest in our Predicting supermarket shopping
Slide 74: Global expansion of digital personalization across all brands
74 The future: more data & relevance; global expansion Our of digital personalization across all brands Sustainable Customer Business transaction data Model TRANSFORM Web/app data ACCELERATE START TO DIGITAL BRANDS BRANDS Previous offer BRANDS response data Avg. product use time (e.g. eggs 4 days) W
Slide 75: Our sustainable business model
Our sustainable business model 75 Our Sustainable Business Save for our customers: Invest in our customer Model • Buy better proposition: • Operate smarter • Affordable for all • Waste less • Best own brands • Fresher & healthier • Most local & personal service Fund growth in key channels: ` • Super
Slide 76: eCommerce: Where did we leave you in 2014?
eCommerce: Where did we leave you in 2014? 76 Our Sustainable Strategy: Business 2014 Model €1.4 billion €1.4 online sales* More customers bol.com Peapod Albert Heijn Online More places Ambition 2017 Fund growth €2.5 billion online sales* €2.5 in key channels 20-25% CAGR More choices Supermarkets eC
Slide 77: Well on track to €2.5 billion
Where are we today? Well on track to € 2.5 billion 77 Our In € billion 2.3 Sustainable Business 1.8 Model 1.4 2014 2015 2016* Growth is accelerating, new brand opportunities Fund growth in key channels Supermarkets eCommerce Smaller formats *Estimated consumer sales includes sales from third parties
Slide 78: More customers, more places, more choices
More customers, more places, more choices 78 Our More customers More places Sustainable Business Model NPS NPS NPS NPS 2016 2016 NPS 2015 2016 2015 Belgium: Bol.com ‘16 NYC: Peapod ‘16 NPS: (%promoters / % detractors)*100 -- promoters defined 9 & 10 and sales growth >50% sales growth >25% detractors
Slide 79: A clear roadmap to profitability
A clear roadmap to profitability 79 Our Five must-have’s for online Bol.com profitable today in Online grocery delivers 3-5% more established categories… Sustainable EBITDA margins in dense grocery profitability: Business home delivery areas and 1. Large baskets Model B2B ; overall still negative 2.
Slide 80: Continued strong market growth expected
Continued strong market growth expected 80 Our Sustainable eCommerce Food – eCommerce Business as % of total retail market - 2016 as % of total market - 2016 Model 25% Expected growth rate ’17-20: +10-15% p.a. 7.0% Expected growth rate ’17-20: +20-30% p.a. 20% 6.0% 5.0% 15% 4.0% 10% 20% 3.0% 6.0% 2.
Slide 81: Our 2020 ambition: double eCommerce sales
Our 2020 ambition: double eCommerce sales 81 Our Sustainable Ambition 2020 Business Model 2016* Double eCommerce sales* (20-25% CAGR) €2.3 bln x2 Fund growth in key channels Supermarkets Bol.com Online Grocery eCommerce Smaller formats *Estimated consumer sales includes sales from third parties (f.e
Slide 82: Continued investments to support further growth
Continued investments to support further growth 82 Our Sustainable • Continued EBIT investments; decreasing as % of Business Model Investing sales in talent, • Underlying EBITDA levels of 2-3% in mature capabilities markets ... • Dilutive impact of Bol.com growth on NL margin ~60 bps in 2017 … and i
Slide 83: Our eCommerce strategy
Our eCommerce strategy 83 Our No. 1 eCommerce platform Sustainable Lead in online grocery in NL & Belgium Business Model Fund growth in key channels Supermarkets eCommerce Smaller formats
Slide 84: Winning in online grocery
Winning in online grocery 84 Our 1. Strong brands 2. High quality, 3. Fresh 4. Own brand 5. Omni-channel Sustainable cost efficient in Europe and US Assortment products leverage operations Business Model Fund growth in key channels Supermarkets eCommerce Smaller formats
Slide 85: Strong online grocery brands in Europe
1: Strong online grocery brands in Europe 85 Our #1 online food retailer Unique in Belgium …and new ‘small gems’ Sustainable in the Netherlands Business Model • #1 most trusted brand • Relaunched Delhaize.be • Covers 86% of Dutch Oct ’16 households with home delivery, also offers Pick • Strong growt
Slide 86: Strong online grocery brand potential in the US
1: Strong online grocery brand potential in the US 86 Our #1 online grocery brand in the Significant opportunities for growth: Sustainable United States - ~140 million customers in Ahold Delhaize trading Business area, Peapod service available for ~40% Model - Growing market share where available, b
Slide 87: A winning operational model, ready to expand
2: A winning operational model, ready to expand 87 Our Sustainable Business Model Best in class automated Ah.nl warehouse benchmark All in Productivity 135 150-160 Fund growth Item completeness 99.6% ~99% in key channels Supermarkets Driver timeliness 98.8% ~95% eCommerce Smaller formats Capex ~10M
Slide 88: Proven Fresh and Own Brand advantages
3/4: Proven Fresh and Own Brand advantages 88 Our H1 ’16 as % of sales Peapod AUSA stores Continuous fresh innovation Sustainable % Fresh / Frozen 41% 40% Business Model % Organic 7% 3% % Own Brand 32% 39% H1 ’16 as % of sales Ah.nl AH % Fresh / Frozen 56% 56% % Organic 5% 4% % Own Brand 51% 52% Fun
Slide 89: Omni-channel leverage
5: Omni-channel leverage 89 Our Leveraging stores as pick up Omni-channel customers’ annual spend Sustainable points around the world =~2x store -only customers Business Model X 2.0 Omnichannel customers Store only customers X 1.8 Omnichannel customers Fund growth in key channels Supermarkets Store
Slide 90: Our eCommerce strategy
Our eCommerce strategy 90 Our No. 1 eCommerce platform Sustainable Lead in online grocery in NL & Belgium Business Model Fund growth in key channels Supermarkets eCommerce Smaller formats
Slide 91: Bol.com is the undisputed #1 retail platform
Netherlands/Belgium vision: 91 Our Sustainable Business Model Bol.com is the undisputed #1 retail platform for anyone who wants to buy or sell anything Fund growth in key channels Supermarkets in the Netherlands and Belgium eCommerce Smaller formats
Slide 92: Bol.com is an unrivalled proposition for NL & BE customers
92 Bol.com is an unrivalled proposition for NL & BE customers Our Large, relevant assortment Uniquely personalized shopping experience Sustainable Business >14.000.000 items Model >14.000 marketplace business partners Fast, free delivery (order before Unique open invoice payment option, yet low bad
Slide 93: Leading to a very strong brand
…leading to a very strong brand 93 Our Indispensable Dutch brands 1 Strongest Dutch retail brands 4 Top marks customer for satisfaction Sustainable 1. Hema 1. bol.com Business 2. bol.com 2. Kruidvat Model 3. Ikea 3. Hema 4. Kruidvat 4. Albert Heijn 5. Action 6. Albert Heijn 11. Google 28. Facebook B
Slide 94: Bol.com is well positioned for future platform growth
94 Bol.com is well positioned for future platform growth Our Category growth Belgium Marketplace Cross brand Sustainable Business Model Category Share CAGR ‘13-’16: ~+70% CAGR ‘13-’16: +~80% 28% 11% 6% 1% 2013 2014 2015 2016 2013 2014 2015 2016 Annual spend per Fund growth customer up from in key ch
Slide 95: In summary: Ahold Delhaize eCommerce
In summary: Ahold Delhaize eCommerce 95 Our Proven track Ambition 2020 Clear strategy Sustainable record of growth Double eCommerce sales 1 Business Model Lead in online grocery x2 Fund growth in key channels Supermarkets eCommerce No. 1 eCommerce platform Smaller formats * Expected 2016 1 From base
Slide 96: Cautionary notice
96 Cautionary notice This communication includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words such as strategic, sustainable, buy better, operate smarter, waste less, growth, invest, customer proposition, promises, foll
Slide 97: Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
97 Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
Slide 98: Integration and Synergies
Capital Markets Day Integration and Synergies Frans Muller Deputy CEO and Chief Integration Officer December 7, 2016
Slide 99: Agenda
99 Agenda 1. Achievements since Day 1 2. Synergies 2016 - 2019 3. Integration costs 2015 - 2019
Slide 100: New corporate governance in place from Day 1
New corporate governance in place from Day 1 100 Achievements since Day 1 CEO COO COO COO Deputy CFO CST&CO CE&IO CLO CHRO Europe AUSA DA CEO Three COOs Three HQ based Four functional MB Members MB members ExCo members MB (Management Board) ExCo (Executive Committee)
Slide 101: Swift and smooth integration of Corporate HQs
Swift and smooth integration of Corporate HQs 101 Achievements since Day 1 SB: Draft V5
Slide 102: Strong collaboration across entire organization
Strong collaboration across entire organization 102 Achievements since Day 1 • Good mix of former Ahold / Delhaize associates • Compatible cultures facilitating collaboration • Committed to changing legacy ways of working • Dedicated teams focusing on synergy capture • Implementing “the best of both
Slide 103: Fully operational EU Support Office
Fully operational EU Support Office 103 Achievements since Day 1 Netherlands Managing business portfolio Belgium Czech Republic Luxembourg Leveraging scale Romania Serbia Capturing synergies Sharing best practices Greece Driving new growth Indonesia
Slide 104: Set-up of new U.S. business services organization
Set-up of new U.S. business services organization 104 Achievements Ahold USA Delhaize America since Day 1 Retail Business Services From January 1, 2017 Strategic Objective Design Priorities1 Leverage scale and apply best practices A new effective and World class support providing expertise and tools
Slide 105: Retail Business Services offering first class services to U.S. brands
105 Retail Business Services offering first class services to U.S. brands Achievements since Day 1 Activities in scope Service Level Framework • Finance, HR, Legal & IT Services 1. Charter • Supply Chain 2. Scope of service • Own Brands • Retail Operations Support 3. Service level metrics 4. Chargeb
Slide 106: Leveraging opportunities for transactional processes
106 Leveraging opportunities for transactional processes Achievements since Day 1 Sourcing Leveraging existing know-how and outsourcing models Technology Leveraging existing ERP and IT solutions for Finance and HR Operating Model Determining service delivery models Optimization Realizing identified
Slide 107: IT enabling the business
IT enabling the business 107 Achievements since Day 1 Readiness for Day 1-30-90: • Defined the purpose of IT in the new company • Design of new organization structure • Setting the new cultural tone • New external corporate website • Systems changes for financial & operating structures • Enabling co
Slide 108: IT enabling the business
IT enabling the business 108 Achievements Looking further ahead - 90 days to 2020 since Day 1 • Business & IT operating models – focus U.S. • Strategic framework for IT • Keep legacy systems in place • High quality local execution for local trading performance • Enable the new ways of working • Nego
Slide 109: Cultural transformation
Cultural transformation 109 Achievements since Day 1
Slide 110: Similar values and shared focus on the customer
Similar values and shared focus on the customer 110 Achievements • Strategic Framework and values drafted based on the two companies’ since Day 1 historic strengths • The top 80 leaders came together to discuss, give feedback and fine-tune (May 2016) • Deployment started with 350 leaders in Washingt
Slide 111: Complementary capabilities result in best practice exchange
111 Complementary capabilities result in best practice exchange FLEXIBILITY Achievements Culture diagnostic shows similar strengths since Day 1 LEARNING PURPOSE Result driven INTERDEPENDENCE • INDEPENDENCE • Caring Leaders, Associates, & Environment ENJOYMENT Culture CARING • Strong retail operation
Slide 112: Agenda
112 Agenda 1. Achievements since Day 1 2. Synergies 2016 - 2019 3. Integration costs 2015 - 2019
Slide 113: Commitment to deliver €500 million net synergies
Commitment to deliver €500 million net synergies 113 Synergies Synergies in excess of € 500 million will be reinvested in the business 2016 - 2019 Split per geography Split per category 10-15% 30-35% 20-25% 50-55% 65-70% 10-15% US EU GSO Sourcing Indirect Sourcing G&A/Other Quarterly synergy reporti
Slide 114: On-target progress harmonizing buying prices of A-brands
114 On-target progress harmonizing buying prices of A-brands Synergies 90% deals closed 35% deals closed 2016 - 2019 On target On target Completion Dec 2016 Completion Q1 2017 For illustration purposes only
Slide 115: Key US Sourcing negotiations on-target
Key US Sourcing negotiations on-target 115 Synergies Description 2016 - 2019 A • National branded goods primarily sold in center store A-Brands • Negotiations will take place over 6-8 months in three (n=240) key phases, prioritizing food in waves 1 and 2 and other products in wave 3 B • Produce and
Slide 116: Expanded partnership with Coopernic
Expanded partnership with Coopernic 116 Synergies Coopernic for International Brands: 2016 - 2019 • Combined sales of €133 billion Key facts • 22,000 stores across 22 countries • On top rebates • Ahold Delhaize • Leclerc Partners • Rewe • Coop Italy Current • At target; most vendor status negotiatio
Slide 117: Expanded partnership with AMS
Expanded partnership with AMS 117 Synergies AMS for Own Brands: 2016 - 2019 • Combined sales of €113 billion Key facts • 15,000 stores across 22 countries • Dry groceries only • Ahold Delhaize • Danske Supermarket • ICA Partners • Jeronimo Martins • Kesko • Migros • Morrisons Current • Scale allowin
Slide 118: Significantly reducing Not For Resale expenditure
Significantly reducing Not For Resale expenditure 118 Synergies 2016 - 2019 • Annual spend on NFR goods and services €6.4 billion (Opex & Capex) • Opportunities for synergies through: – Rate harmonization – Alignment of demand and specifications – Operating model (In-house or Outsource) • Office (in
Slide 119: Besides synergy capture, focus also on best practice sharing
119 Besides synergy capture, focus also on best practice sharing Synergies 2016 - 2019
Slide 120: P&L impact net synergies 2016-2019
120 P&L impact net synergies 2016-2019; confident in 2017 delivery Synergies 2016 - 2019 Timeline 2016 – 2019 Split per geography 2017 In € million 500 420 25-30% 220 55-60% 10-15% 20 2016 2017 2018 2019 US EU GSO
Slide 121: Agenda
121 Agenda 1. Achievements since Day 1 2. Synergies 2016 - 2019 3. Integration costs 2015 - 2019
Slide 122: Integration costs expected within €350 million estimate
122 Integration costs expected within €350 million estimate Integration Split per geography Split per category costs 2015 - 2019 Commercial G&A 10-15% 10-15% Non 30-35% commercial G&A 45-50% IT 30-35% 40-45% 20-25% Integration Management Office US EU GSO
Slide 123: Integration Costs 2015-2019
123 Integration Costs 2015-2019 Integration Timeline 2015 - 2019 Split per geography 2017 costs 2015 - 2019 In € million In € million 145 129 20-25 20-25 53 80-85 23 2015 2016 2017 2018 - 2019 US EU GSO
Slide 124: Conclusion
124 Conclusion Top structure in place; transition to single HQ completed Compatible cultures drive strong collaboration across organization Comprehensive synergy program in place; confident in €500 million delivery Early results lead to full confidence in 2017 synergy target US shared services organ
Slide 125: Cautionary notice
125 Cautionary notice This communication includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words such as strategic, sustainable, buy better, operate smarter, waste less, growth, invest, customer proposition, promises, fol
Slide 126: Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
126 Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
Slide 127: Financial framework
Financial framework Jeff Carr Chief Financial Officer December 7, 2016
Slide 128: A clear financial framework to support our strategy
128 A clear financial framework to support our strategy Clear operational metrics Disciplined approach to capital investment • Continuous improvement of the cost base • Disciplined capex spending • Reinvestment in the customer • Return on capital among top proposition quartile of the industry • Fund
Slide 129: Our sustainable business model
Our sustainable business model 129 Clear operational Invest in our metrics customer proposition Focus on key metrics Save for our customers • Underlying operating margin • Save for our customers • Sales growth • Price, quality and service • Capital expenditures • Free cash flow • Working capital Fun
Slide 130: Cost discipline is in our DNA
Cost discipline is in our DNA 130 Clear • Simplicity at Ahold: over €1 billion savings operational metrics delivered over 2012-2015 Good track • Focus at Delhaize on SG&A as % of sales record • in 2015, each operating segment decreased SG&A as % of sales; • Transformation Plan Belgium launched to ac
Slide 131: Identified initiatives across our business
Identified initiatives across our business 131 Clear Not for resale Fact-based Own brands operational negotiations metrics Buy better Transportation Promo efficiency Labor efficiency optimization Operate smarter Recycling Energy conservation “Instock” Save for our customers Buy better Waste less Ope
Slide 132: Smarter packaging at Albert Heijn
Smarter packaging at Albert Heijn 132 Clear Fresh juices operational metrics From glass bottle (267 grams) to PET bottle (29 grams) for volumes from 500 ml Annualized savings € 2 million Meat tray Replace AH Fully embedded in specific meat tray Albert Heijn’s strategy with logo (44 Save for our gram
Slide 133: Labor efficiencies at AUSA
Labor efficiencies at AUSA 133 Clear Deploy in-store resources where it matters Improved performance operational the most to our Brands’ customers • Productivity (Items Per Labor metrics • New labor processes & scheduling Hour) +~4.0% • More efficient replenishment and • Cumulative labor savings (20
Slide 134: Utility efficiencies at AUSA
Utility efficiencies at AUSA 134 Clear LED Replacements operational • All new LED fixtures installed in metrics stores and refrigerated multi-deck cases Variable Speed Drive • Ventilation: minimize the amount Improved efficiency (lower kWh) of outside air that needs to be • Cumulative savings (2013-
Slide 135: Continuous investments in growth
Continuous investments in growth… 135 Clear Food Lion Ahold USA operational Easy, Fresh & Affordable Price investments metrics • 16 consecutive quarters of positive Ahold USA ID Volume growth volume growth FY14 -1.6% • 2017: ~$290 million capex for an FY15 -0.5% additional ~160 stores YTD16 1.0% in
Slide 136: While maintaining resilient margins
…while maintaining resilient margins 136 Clear Ahold USA Delhaize America operational 6.6% 6.8% 6.8% 6.6% 6.6% 6.6% metrics 3.8% 4.0% 3.9% 3.3% 3.4% 3.4% Underlying Underlying Underlying Underlying EBITDA margin operating margin EBITDA margin operating margin 2015 includes a 53rd week The Netherland
Slide 137: A clear financial framework to support our strategy
137 A clear financial framework to support our strategy Clear operational metrics Disciplined approach to capital investment • Continuous improvement of the cost base • Disciplined capex spending • Reinvestment in the customer • Return on capital among top proposition quartile of the industry • Fund
Slide 138: Disciplined capex spending
Disciplined capex spending 138 Disciplined 2017 capex expected broadly similar to 2016 at €1.8 billion approach to In € billion capital investment Geography Capex/sales (2016 ) e 13% ~1.6 ~1.8 ~1.8 3.0% 2% 2% 2% 2.7% 14% 14% 13% 10% 10% 10% 19% 22% 20% 27% 26% 27% 28% 26% 28% 2015 2016 2017 Ahold De
Slide 139: Maintaining a high return on capital
Maintaining a high return on capital 139 Disciplined Return on capital Peer comparison (2015) approach to capital investment 12.6% 13.3% 13.2% Target to keep 13.3% ROC in the top 11.8% quartile of the industry 2014 2015 2016 2017 2018 2019 Ahold Average Delhaize peers • Clear and strict return crite
Slide 140: A clear financial framework to support our strategy
140 A clear financial framework to support our strategy Clear operational metrics Disciplined approach to capital investment • Continuous improvement of the cost base • Disciplined capex spending • Reinvestment in the customer • Return on capital among top proposition quartile of the industry • Fund
Slide 141: Target to improve working capital by 1 day by 2018
Target to improve working capital by 1 day by 2018 141 Best in class Working capital days cash generation -13 -13 -14 2015 2016e 2018e Focus for 2017-2018: review and align working capital approach within the group to: • Optimize payment terms • Improve inventory turnover 1 day improvement represent
Slide 142: Target to generate ~€1.6bn FCF in 2017
Target to generate ~€1.6bn FCF in 2017 142 Best in class Ahold + Delhaize combined Free cash flow cash In € million In € billion 1,823 1,778 1,812 ~1.6 generation 1,702 ~1.3 2012 2013 2014 2015 2016 2017 2018 2019 2015 FCF (% of sales) Future free cash flow generation driven 2.7% by: • Merger synerg
Slide 143: A clear financial framework to support our strategy
143 A clear financial framework to support our strategy Clear operational metrics Disciplined approach to capital investment • Continuous improvement of the cost base • Disciplined capex spending • Reinvestment in the customer • Return on capital among top proposition quartile of the industry • Fund
Slide 144: Our approach to capital allocation
Our approach to capital allocation 144 Balanced approach to Balanced approach between capital allocation Managing our debt Funding growth in key Returning excess liquidity portfolio channels to our shareholders
Slide 145: Ahold Delhaize net debt evolution
Ahold Delhaize net debt evolution 145 Balanced In € billion approach to capital 7.3 allocation 0.2 1.7 5.8 3.7 Ahold 3.4 3.6 3.2 0.8 0.1 0.3 Delhaize 2.5 Q2 2016 PPA and Q3 2016 Q3 2016 Q3 2016 Q3 2016 Q4 2016 Yen bond FX and YE 2016e Gross debt Pooling FX & other Gross debt Cash Net FCF transaction
Slide 146: Appropriate leverage within credit ratings bandwidth
146 Appropriate leverage within credit ratings bandwidth Balanced We will maintain our solid 2016 S&P Lease adj. Net debt/EBITDA approach to investment grade credit rating capital allocation and view our leverage as appropriate given it allows us to: 3.1x • Fund our growth opportunities BBB 2.0x • M
Slide 147: Optimizing our debt portfolio
Optimizing our debt portfolio 147 Balanced Debt and liquidity management Updated debt maturity profile approach to objectives are: capital In € million allocation Mar-17 12 • Achieving efficient balance sheet Jun-17 154 • Maintaining strong liquidity 2018 400 2019 116 • Reducing refinancing risk 202
Slide 148: Providing attractive shareholder returns
Providing attractive shareholder returns 148 Balanced Sustainable growth in Dividend per Returning excess liquidity to approach to capital common share (€) shareholders allocation +6% +9% • €1 billion share CAGR CAGR buyback over 2017 0.52 1.56 1.60 1.80 • Starting mid-January 0.44 0.47 0.48 1.40 20
Slide 149: A clear financial framework to support our strategy
149 A clear financial framework to support our strategy Clear operational metrics Disciplined approach to capital investment • Continuous improvement of the cost base • Disciplined capex spending • Reinvestment in the customer • Return on capital among top proposition quartile of the industry • Fund
Slide 150: Strong foundation and confidence in the future
150 Strong foundation and confidence in the future • Strong volume growth in both US segments in Q3 • Ahold USA: Comparable sales 0.3%, volume growth 1.1% • Delhaize America: Comparable sale 1.3%, real growth 2.9% • Continued growth across Europe in Q3 • Comparable sales of 3.3% in NL, 1.3% in BE an
Slide 151: Cautionary notice
151 Cautionary notice This communication includes forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Words such as strategic, sustainable, buy better, operate smarter, waste less, growth, invest, customer proposition, promises, fol
Slide 152: Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
152 Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
Slide 153: Capital Markets Day – Dick Boer
Capital Markets Day Dick Boer President and CEO December 7, 2016
Slide 154: Closing remarks
154 Closing remarks • Well positioned to win across all our markets • Benefitting from international scale to build great local brands • Driving cost savings to invest for our customers • Fund growth in key channels: Supermarkets, Small formats and eCommerce • Integration on track • Committed to €50
Slide 155: Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
155 Together, we build Great Local Brands, bringing Fresh Inspiration Every Day
Koninklijke Ahold Delhaize — Investor Day (December 2016) on 6ix